The Canadian wireless sector was shocked last week by the abrupt departure of the three major new entrants – Wind Mobile, Public Mobile, and Mobilicity – from the Canadian Wireless Telecommunications Association. The new entrants took the CWTA by surprise, issuing a stern release claiming the association has shown consistent bias in favour of Bell, Telus, and Rogers, the three incumbent providers. Moreover, the companies pointed to a blatant disregard for new entrants and alleged that the CWTA had failed to honour repeated promises of fair representation.

The move is a major blow to the CWTA, which has long promoted itself as the voice of the industry. For example, during the recent CRTC consumer wireless code hearing, it opened by telling the commission that it â€œrepresents virtually all of the major companies in Canada’s wireless telecommunications ecosystem.â€

No longer.

While analysts searched for a specific incident that led to the departure, the more likely explanation lies in the ongoing battle over the state of competitiveness of the Canadian wireless sector. The question is not a mere academic debate since key government policies, including the framework for the forthcoming multi-billion dollar spectrum auction, the creation of an enforceable consumer wireless protection code, and the rules on much-hated three-year wireless contracts, all hang in the balance.

The CWTA has long argued that the Canadian market is competitive and that no government intervention or additional regulation is needed. Indeed, as far back as 2000, the association told officials â€œthe Canadian wireless market has been competitive from the outset.â€

As study after study pointed to high consumer prices and comparatively low subscriber rates, the government began to entertain the possibility of a set-aside in a spectrum auction to pave the way for new entrants into the market.

Once again, the CWTA argued against the approach, claiming that the market was already competitive and that no intervention was needed. The government rejected the CWTA’s position, leading to the 2008 set-aside and the eventual entry of Wind Mobile, Public Mobile, and Mobilicity into the market.

The new entrants succeeded in providing lower-cost alternatives, yet the incumbents did little to alter their approach, hoping that the new competition would be short-lived. Provincial governments became involved with several proposing new wireless consumer protections. The CWTA first argued against provincial involvement in the issue and later against immediate implementation of a national code being crafted by the CRTC.

For the new entrants, an association committed to fighting efforts to enhance competition and consumer protection was an association fighting against their own interests since their long-term viability depends on maintaining policies designed to promote further competition. While the CWTA and the new entrants may have been able to paper over their differences on technical issues, the competitiveness issue was too important for compromise.

At the recent CRTC hearing on a consumer wireless code, Wind Mobile openly broke with the CWTA, telling the commission thatâ€œThe CWTA has elected to take certain positions over the express objections of WIND Mobile (on the basis that such positions are not “industry positions” but rather those of a BRT-dominated CWTA board). Accordingly, without needing to single out positions taken by the CWTA which align with those of WIND Mobile, WIND Mobile simply states that WIND Mobile does not support the CWTA submission.â€

Moreover, Mobilicity had already publicly differed with the CWTA on consumer issues back in 2011, stating that it was â€œexceptionally disappointed with the CWTA’s lack of foresight in continuing to act only in the interests of the Big Three wireless oligopoly.â€

Viewed in this light, the only surprising thing about the decision to abandon the CWTA is not why, but rather what took so long. The move sends a strong message to the government and the CRTC that there remain deep divisions within the industry with many legitimate concerns about competitiveness of the Canadian wireless market.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.